Using data from real estate corporations, we report that related diversification over different property types is associated with a discount while geographical diversification has no significant effect on shareholder value. Related diversification in order to exploit potential synergistic gains does not improve operating performance as measured by return on assets (ROA). Applying an ex ante measure, which discriminates between focusing and non-focusing corporate strategies, we find that corporations expected to pursue non-focusing (diversifying or unclear) strategies are valued at a 20% discount, and are controlled by large private owners. This ex ante diversification discount is a measure of agency costs associated with highly concentrated private ownership. Expected corporate strategy is a previously neglected but more fundamental determinant of shareholder value than contemporaneous focus per se.

To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.

When requesting a correction, please mention this item's handle: RePEc:hhs:hastef:0219. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helena Lundin)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through
the various RePEc services.